In July 2026 the European Commission adopted the VSME as EU law through a delegated act. If you run a small or medium-sized business in Europe, customers, banks, or industry associations have probably mentioned it.
VSME is a standardized way for SMEs to report sustainability data, designed for businesses without an ESG team. It is voluntary. The word is misleading, because customers can require it commercially.
| First question | Short answer |
|---|---|
| Am I legally required to report under VSME? | No. It is voluntary for companies outside CSRD scope. Customers may still require VSME-aligned data as a condition of business. |
| How much do I have to do? | The Basic Module: 11 disclosures, most of them data you already hold in bills and payroll. |
| Do I need a materiality assessment? | No. The Basic Module has no double-materiality requirement. |
| What do I track? | Monthly: electricity, gas, fuel, water, waste, headcount. Annually: accidents, training hours, policy status, certifications. |
| Where do I start? | The free VSME readiness checker shows which disclosures you can already cover. |
What changed in 2026
Two things, both relevant to suppliers.
VSME is now the official standard. It began as a voluntary Commission Recommendation in July 2025. In July 2026 the Commission made it EU law through a delegated act. It is now the recognized format large companies use to request sustainability data from their supply chain.
Fewer companies are legally required to report. The EU's Omnibus reform raised the bar for mandatory CSRD reporting to companies with more than 1,000 employees and more than €450 million in turnover. Many mid-sized businesses that were in scope no longer are.
The largest companies — the ones with the largest supply chains — are still reporting and still need data from suppliers. What changed is that VSME is now the format for those requests. Being VSME-ready means answering once, in the standard everyone is converging on, instead of a different spreadsheet per customer.
What the VSME standard is
EFRAG (the European Financial Reporting Advisory Group) developed VSME as part of the CSRD ecosystem. Large companies reporting under CSRD need sustainability data from their supply chain; VSME gives SMEs a standardized format to provide it.
It is a common language. Instead of every customer sending a different spreadsheet, VSME defines the data points SMEs report. Banks and investors are beginning to use it for green financing decisions.
Two levels: a Basic Module (11 disclosures) and a Comprehensive Module (more detail, for larger SMEs). Most small suppliers need only the Basic Module.
The 11 Basic Module disclosures
B1 — Basis for preparation. Business model, products and services, markets, number of employees.
B2 — Practices, policies and future initiatives. Policies on ethics, anti-corruption, human rights, and supplier management; initiatives to become more sustainable; governance structures. The Basic Module has no separate materiality disclosure.
B3 — Energy and greenhouse gas emissions. Total energy consumption (electricity, heating, transport), renewable share, and Scope 1 and 2 emissions. Usually the most data-intensive disclosure.
B4 — Pollution. Significant air, water, or soil pollution. For many office-based or light-manufacturing businesses, minimal.
B5 — Biodiversity. Whether operations affect biodiversity. For most small suppliers, a short statement about site locations and land use.
B6 — Water. Total water consumption in cubic meters.
B7 — Resource use, circular economy and waste. Total waste generated, recycling rate, hazardous waste volumes. The second most requested data point after emissions.
B8 — Workforce: general characteristics. Total headcount (FTE) by gender; new hires and departures.
B9 — Workforce: health and safety. Work-related accidents, injuries, fatalities; hours worked, for incident rates.
B10 — Workforce: remuneration, collective bargaining and training. Training hours per employee; whether the workforce is covered by collective bargaining agreements.
B11 — Convictions and fines for corruption and bribery. Any during the reporting period. For most suppliers, "none", but it must be stated.
The data to collect
Stripped of the formal language, the Basic Module comes down to a handful of data points collected regularly.
Monthly:
- Electricity consumption (kWh) from utility bills
- Gas consumption (kWh) from gas bills
- Vehicle fuel (liters) from fuel receipts or fleet records
- Water consumption (m³) from the water bill
- Waste volumes (kg) from hauler invoices
- Headcount from payroll
Annually or as needed:
- Work-related accidents and near misses (HR or incident reports)
- Training hours delivered (HR records)
- Policy status (environmental policy, code of conduct, and so on)
- Certifications held (ISO 14001, ISO 45001, and so on)
Tracked monthly, this is everything needed to complete the Basic Module at year end. The difficulty is not the calculation. It is collecting the data consistently.
Starting without a sustainability team
VSME was designed for businesses with limited resources.
Step 1: gather what exists. The last twelve months of utility bills, waste invoices, and payroll data. Most of the required data is already in those records.
Step 2: set up monthly tracking. One person — office manager, finance lead, operations manager — enters the data once a month.
Step 3: document policies. Check which governance documents exist. Most companies have at least a basic code of conduct or health and safety policy. Note which exist and which do not.
Step 4: calculate emissions. Scope 1 from gas and vehicle fuel; Scope 2 from electricity. If the terms are new, the Scope 1, 2 and 3 explainer covers what counts where. Standard conversion factors exist for both; multiplying kilowatt-hours by an emission factor does not need a consultant.
Step 5: produce the first report. After twelve months of tracking, compile the data into the VSME format: a document or spreadsheet covering the 11 disclosures.
ESG Passport automates most of this — data entry, emissions calculation, report generation — in the browser. No cloud account, no subscription.
"Voluntary" is not "optional"
Nobody fines a company for not producing a VSME report. But large companies reporting under CSRD need supplier data, and VSME gives them the standard format to request it. If a customer adopts VSME as its supply chain data framework, responding becomes a commercial requirement. If such a request has already arrived, why your customer sent a VSME questionnaire explains what is behind it.
Banks are beginning to use VSME-aligned data for green financing assessments. For a sustainability-linked loan, having the data ready shortens the process.
Companies that start tracking now are ready when the requests arrive.
Next
If you already receive ESG questionnaires from customers, the questions map closely to the VSME disclosures. The VSME 11 disclosures guide covers each in detail.
For a quick check of where you stand, the free VSME readiness checker shows which disclosures you can already cover with data you hold today.